Asian Markets Update: Sony Soars Ahead of Playstation 2 Debut as Sega Feels the Pressure

TOKYO -- With the recovery of the Dow Jones Industrial Average overnight, relief spread through Asian equity markets Tuesday, but both Tokyo and Hong Kong's markets were enthralled by tech and telecom plays, not blue-chips.

For Tokyo, the near 5.0% rise in Sony (SNE) kept the market buoyant, while news that Pacific Century Cyberworks had outbid Singapore Telecommunications for control of Cable & Wireless HKT (HKT) brought to an end one of the biggest corporate takeovers ever seen in Asia.

The key Nikkei 225 index was up 239.42, or 1.2%, to 19,959.52, while the Topix, comprised of shares listed on the Tokyo Stock Exchange's first section, fell 9.50 to 1718.94. The Jasdaq small-cap index rose 0.28 to 125.72, while the Nikkei over-the-counter market climbed 26.92, or 1.0%, to 2691.55.

Shares of Sony closed up 1500, or 4.8%, to 32,500 when the firm said it agreed to license chip making and distribution rights of a proprietary audio compression technology called ATRAC3 to seven U.S. and Japanese semiconductor companies.

Sharp (SHCAY) rose 90, or 4.1%, to 2300 after announcing that it will jointly develop mobile telephones in the U.S. with Lucent Technologies (LU).

After launching a new health care and nursing joint venture with several other firms, shares of Seven-Eleven Japan (SVELY) fell 1010, or 8.4%, to 11,060 and NEC (NIPNY) climbed 60, or 2.5%, to 2455.

With children of all ages looking forward to the March 4 launch of Sony's new PlayStation 2 game console, rival Sega Enterprises (SEGNY) is feeling the pressure. Its shares tumbled 500, or 12.2%, to 3600 when the firm said it was expecting additional losses for fiscal 1999 due to the lack of sales of its Dreamcast game console. Sega's parent CSK (CSKKY) also fell 2000, or 14.9%, to 11,440.

Telecom shares were hit with a bout of profit taking, with some attributing the sales to foreign fund managers trying to pump up their portfolios with profits before the end of the month. Nippon Telegraph & Telephone (NTT) slid 20,000, or 1.3%, to 15.2 million, while DDI slid 30,000, or 2.9%, to 1.02 million.

In lethargic currency dealings, the greenback stood at 110.20 against the yen and 0.9673 versus the euro. Yesterday, the euro sank to an all-time low against the dollar before making a slight recovery today.

Hong Kong's Hang Seng index rose 185.00, or 1.1%, to 17,169.44, with traders anxiously awaiting the final details of Pacific Century Cyberworks' bid for Cable & Wireless HKT. Various reports have said Pacific Century would pay on the order of $38 billion in cash and stock for the 54% stake of the company owned by Britain's Cable & Wireless Plc.

Pacific Century is expected to share ownership in the merged entity, to be called PCCW-HKT. C&W HKT will hold about 20%, while mainland Chinese-controlled China Telecom (CHL), CMGI (CMGI) and Intel (INTL) will each hold 2% to 5%. Singapore Telecommunications, which was in merger talks with C&W HKT before PCC came into the picture, officially bowed out today.

The Hong Kong Monetary Authority has reportedly asked PCCW and four lending banks not to finance the deal in Hong Kong dollars, because it would put heavy pressure on the territory's M3 money supply. Pacific Century could be planning a $10 billion, 12-month bridge loan instead, local media have reported. If true, that would throw into question how the company would be able to raise more money in a year's time, since its current businesses have yet to begin trading.

Shares in China Telecom rose 1.25, or 1.8%, to 72.00. Trading for PCC and C&W HKT are suspended, with PCCW expected to resume trading Wednesday.

Elsewhere, Korea's Kospi index rose 9.37, or 1.1%, to 828.38, while Thailand's key SET index was down almost 2.4% as investors worried that the amount of banks' nonperforming loans could be higher than previously expected.

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